Conventional and Sharia Compliant Index in United Kingdom. Similarities and Differences - Economicus

by Phd. Cand. Zyber NESIMI, Prof. As. Mateo SPAHO

Abstract
Global economic crises have revealed the structural weaknesses of the conventional financial system, prompting growing interest in more sustainable alternatives. Islamic finance has emerged as a credible and reliable financial framework. Grounded in the principles of Sharia law, it prohibits interest (riba) and promotes risk-sharing among parties, making it a distinctive model in mitigating the effects of economic crises. Islamic indices are not merely financial indicators; they also embody ethical and religious values, encompassing only those companies that comply with Sharia principles. The primary objective of an Islamic index is to achieve lawful (halal) profit while managing risk through ethical means. Islamic indices tend to exhibit greater stability and lower volatility, responding differently to financial shocks compared to conventional indices. This abstract aims to analyze the contribution of Sharia-compliant economic activities to the financial stability of the United Kingdom and to assess the key differences between Islamic and conventional finance, highlighting the potential for a more resilient and sustainable financial system. The study adopts a comparative and analytical approach, employing both qualitative and quantitative methods to examine the role of Islamic finance during periods of economic crisis and to compare its performance with that of conventional finance. Initially, a literature review is conducted, analyzing scholarly studies on both Islamic and conventional financial systems. Moreover, the relationship between the UK stock market index (FTSE) and GDP (2007–2024) is examined to determine whether economic growth exerts a positive influence on the performance of the British financial market. Particular attention is also devoted to assessing the impact of the UK’s GDP on the performance of the FTSE Shariah Index, which represents British enterprises operating in accordance with Islamic financial principles.

Keywords: Islamic Index, Volatility, Risk Management , Halal , Current GDP.